Virginia Employment Law Journal
Are Managers Who Perform Non-Managerial Duties Entitled to Overtime Pay?
Posted by Anthony E. Cooch Jr. on April 05, 2011
The Fair Labor Standards Act requires employers to pay overtime to employees who work more than forty hours in a given week. The Act provides several exceptions or “exemptions” to the forty hour rule. If an employee falls under one of these exemptions, they are not entitled to overtime compensation.
One exemption that is commonly used by employers and which has become the subject of recent debate is the “executive exemption”. An employee falls under the executive exemption and is not entitled to overtime when he or she is an employee employed in a bona fide executive capacity.
Under the FLSA and its associated regulations, an employee qualifies under the executive exemption when the following criteria are met:
- The employee is compensated on a salary basis at a rate not less than $455 per week
- The employee’s primary duty is management of the enterprise, department or subdivision
- The employee customarily and regularly directs the work of two or more employees
- The employee has the authority to hire or fire other employees or their suggestions as to hiring, firing, advancement or promotion or any other change in status are given particular weight
The second factor, whether the employee’s primary duty is management, has become the subject of controversy in recent years. Many companies attempting to cut costs will require managers to serve dual roles, acting in both a managerial and employee capacity. For example, a manager may spend part of their day interviewing employees and arranging schedules and then spend another part helping stock shelves or greet customers. This multitasking has brought into question whether such an employee still qualifies under the “executive” exemption when performing dual roles.
Recent Developments in the Law
In Grace v. Family Dollar, Inc., the Fourth Circuit Court of Appeals recently upheld a decision of the U.S. District Court for the Eastern District of Virginia finding that a manager engaged in the dual role of manager and employee qualified under the executive exemption.
Grace, a former employee of Family Dollar filed suit claiming that she was entitled to overtime compensation because she spent the majority of her working time completing nonexecutive tasks. Grace was the manager and highest level employee of a Family Dollar Store. She was responsible for managing employees, managing store operations, dealing with customer and employee complaints and was responsible for the overall profitability of the store.
Grace argued that she was entitled to overtime because even though she was responsible for managing, the majority of her time was spent on nonexecutive tasks such as unloading freight, stocking shelves, operating cash registers and cleaning the store. Grace estimated that she spent 95% of her time on these tasks.
The Court held that Grace concurrently managed the store while performing these nonexecutive tasks and that her performance of these tasks was in furtherance of the larger goal to make the store profitable. Grace operated the store with little supervision and her management was essential to the function of the store. As a result, despite the amount of time she spent on nonexecutive tasks, her primary duty was management and as such exempt status was appropriate.
The Family Dollar case is instructive in that in its analysis the Court spent a large part of the analysis looking at the duties actually performed by the employee and not just what was listed in the job description.
Managers can be expected to perform executive and nonexecutive duties. If the employee is to be classified under the executive exemption, it is incumbent upon the employer to ensure that the employee is primarily performing managerial tasks. Remember, it is not just what a job description may say, but what the employee actually does that is important.
Below are several points that will help ensure that a manager is primarily performing managerial tasks:
- How much time is does the employee spend performing managerial duties?
- What are the specific managerial duties performed by the employee?
- How important are these managerial duties to the overall operation of the company, store or department?
- How often is the employee exercising managerial duties?
- What is the level of supervision of the manager employee? Is the manager closely supervised?
- What company procedures are in place to control manager decision making? Do these procedures give managers discretion?
- How is the employee compensated when compared to non-manager employees? If the manager is salaried, what is their actual compensation when the actual hours worked in taken into account?
- Develop a comprehensive job description that lists the major duties, both executive and nonexecutive, that will be performed by the employee.
- Conduct periodic internal reviews of the employee’s performance, paying special attention to the actual tasks performed and the amount of time spent on the specific tasks.
- family dollar
- fourth circuit
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Employment Legislation from the 2011 Session of the Virginia General Assembly
Posted by Anthony E. Cooch Jr. on March 21, 2011
The 2011 session of the Virginia General Assembly has ended. Below is a summary of employment law legislation that passed both houses during the session.
HB 1705. Workers’ compensation; modifications to employee’s home and automobile
- Authorizes the Workers’ Compensation Commission, in awards entered for incapacity for work, to require the employer to furnish and maintain modifications to or equipment for the injured employee’s automobile
HB 1812. Workers’ compensation; occupational disease presumption for certain police officers.
- Adds police officers of the Metropolitan Washington Airports Authority and Norfolk Airport Authority to the list of public safety employees who are entitled to the presumption that certain infectious diseases are occupational diseases compensable under the Workers’ Compensation Act.
HB 1859. Public Procurement Act; state agencies to include in contract that contractor use E-Verify program.
- State agencies will be required to include in every contract over $50,000, a provision requiring the contractor to use the E-Verify program for employees who will be performing work under the contract within VA.
SB 823. Workers’ compensation; presumption that certain injuries are work related.
- A presumption is created that an injury is work related where an employee is physically or mentally unable to testify and there is unrebutted prima facie evidence that the injury was work related.
- 2011 Session
- General Assembly
- HB 1705
- HB 1812
- HB 1859
- SB 823
- Workers’ Compensation
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Restaurant Charged $780,000 Due to Wage and Overtime Violations
Posted by Anthony E. Cooch Jr. on March 14, 2011
On February 24, Mama’s Pizzeria and Restaurant of Copiague, New York entered into a settlement with the Department of Labor. In the settlement, Mama’s agreed to pay $780,000 in minimum wage and overtime compensation to 40 employees.
Mama’s was charged with paying employees wages less than the minimum wage and requiring employees to work more than 40 hours per week without paying overtime. Mama’s also failed to keep accurate records of wages paid and hours worked by employees.
This case serves as a warning and opportunity for employers to review who is entitled to overtime and what records must be maintained by a business.
Virginia businesses follow the Fair Labor Standards Act (“FLSA”) with regards to overtime and minimum wage standards. The FLSA specifies that employees required to work more than 40 hours in a week are entitled to overtime at a rate no less than 1.5 times the normal hourly rate. Additionally, certain employees are exempt and not entitled to overtime.
The types and number of jobs that are exempt is lengthy. Jobs that are of particular relevance to Virginia include:
- Administrative employees
- Professional employees
- Outside salesmen
- Seasonal employees under certain conditions
- Switchboard operators
- Babysitters, companions, and other “domestic service employees”
- Some technology employees when certain conitions apply – computer system analyst, computer programmer, software engineer
- Commissioned retail/service employees
- Delivery drivers who receive “trip” rates
The FLSA and associated regulation also defines what types of employee records employers are required to maintain. Below are some of the highlights:
Records that must be kept for three years
- Payroll Records.
- Certificates, agreements, plans, notices, etc. – this includes employment agreements, summaries of any oral agreements entered into with the employee and any collective bargaining agreements.
- Sales and Purchase Records for the business.
Records that must be kept for two years
- Basic Employment and Earning Records: timesheets or other method used by employee to track the time worked.
- Rate tables used by the employer in the calculation of piece rates and overtime.
- Copies of customer orders and invoices received and sent.
- Records of additions and deductions to wages paid to employees.
- Department of Labor
- employee wages
- improper deductions
- minimum wage
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Establishing a Drug-Free Workplace Policy Can Lower Company Expenses
Posted by Anthony E. Cooch Jr. on March 07, 2011
In 1997, the Virginia General Assembly passed a law providing savings to employers who establish “Drug-Free” workplace policies. The discount is currently 5% from the Workers’ Compensation insurance policy premium. For larger companies, this can be quite a significant savings.
Additionally, some organizations and individuals doing business with the government are required to provide a drug-free workplace for employees. This would include organizations with federal government contracts in excess of $100,000, organizations receiving federal grant funding, as well as individual contractors and grant recipients. Subcontractors and subgrantees do not fall under this requirement.
There are several sources of good information regarding setting up a drug-free workplace policy:
- Department of Labor: the website provides a great deal of information to businesses on how to setup a drug-free workplace policy including the “drug-free workplace policy builder” which guides individuals through a set of questions to help build the policy.
- Small Business Administration: links to information pertaining particularly to small businesses and government contractors.
- department of labor
- drug free workplace
- employment policy
- small business administration
- workers’ compensation
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Terminating the Employee Who Fails Random Drug Testing in the Workplace
Posted by Anthony E. Cooch Jr. on February 28, 2011
In a recent decision, Virginia Employment Commission v. Community Alternatives, Inc. and April L. Collier, the Virginia Court of Appeals overruled the Virginia Employment Commission’s position that in order to establish worker misconduct for failing a drug test, the employer must include in evidence a certification regarding the chain of custody of the drug test.
The case centered around Community Alternatives, Inc.’s (“CA”) “drug-free workplace” policy. Under the policy, employees agreed to refrain from usage of illegal drugs and agreed to submit themselves to random drug testing. In 2007, April Collier was hired by CA. When hired she signed the policy agreeing to the “drug-free workplace” policy.
In September of 2008, Collier was randomly tested for drugs. She tested positive for marijuana and was subsequently fired for violating the policy. She filed a claim for unemployment benefits with VEC. VEC ultimately awarded benefits despite CA’s objections.
CA argued that Collier was ineligible for benefits under the Virginia Code. VEC disagreed, finding that to establish a case for misconduct, CA was required to file a chain of custody affirmation. Because one was not filed timely, misconduct could not be found under the statute.
The Circuit Court reversed the VEC’s decision, finding that filing a chain of custody affirmation is not a requirement of the statue in order to establish misconduct. In its decision, the Court stated that the “confirmed positive test” must satisfy three requirements:
- the test was conducted pursuant to a “known workplace drug policy”
- the testing and sampling were performed “in accordance with scientifically recognized standards”, and
- the testing lab was “accredited” or the test was a DOT qualified drug screen.
The Court further stated that if the employer can provide evidence to support these three requirements, it then becomes the burden of the employee to present “mitigating circumstances” that can be considered by the VEC in determining whether misconduct occurred.
This case was appealed to the VA Court of Appeals who affirmed the Circuit Court decision in finding in favor of the employer.
While under the statute, establishing the chain of custody for drug test results is not required to establish a case for misconduct, it is good practice to keep these records. In the case, the VEC argued strongly that chain of custody was a requirement of the statute.
Even though the Court ultimately found that chain of custody evidence is not required to establish misconduct under the statute, to avoid the lack of this evidence being considered a “mitigating factor” it is a good idea to have the chain of custody established and certified.
Additionally, if an employer is going to enact a random drug screening policy during employment, these basic guidelines should be followed:
- Establish a “drug-free workplace” policy. Make sure it is signed by every employee as a separate document on the first day they are hired. Is a good practice to include it in application materials.
- When tests are administered, have the administration conducted by an independent third party. Have the third party control the process and provide a certification for chain-of-custody as well as the results.
- Ensure that those conducting the testing and the lab where the tests are evaluated are properly certified.
- Keep records and results confidential. Establish a testing consent form. Form should allow the lab to release results to the employer and employee and if necessary agency or court handling a claim that arises due to the results of the test.
- chain of custody
- drug screening policy
- drug testing
- Employment Commission
- employment law
- Virginia Court of Appeals
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